NEW YORK (Kitco News) - The gold market is seeing some renewed safe-haven demand and technical buying pressure as prices push above an important resistance level following disappointing consumer sentiment data.
The University of Michigan said the preliminary reading of its Consumer Sentiment Index dropped to 70.2, down from July’s reading of 81.2, the data significantly missed expectations as consensus forecasts were calling for a roughly unchanged reading in consumer sentiment.
The gold market appears to be catching a big following the deterioration in consumer optimism. December gold futures last traded at $1,775.70 an ounce, up 1.37% on the day.
Gold prices are trading near session highs following a sharp drop in the University of Michigan Consumer Sentiment Index. December gold futures last traded at $1,775.40 an ounce, up 1.35% on the day.
“Consumers reported a stunning loss of confidence in the first half of August,” said Richard Curtin, director of the consumer sentiment survey, in the report.
Curtin noted that sentiment fell more than 13% from the July levels. “Over the past half-century, the Sentiment Index has only recorded larger losses in six other surveys, all connected to sudden negative changes in the economy,” he said.
“The losses in early August were widespread across income, age, and education subgroups and observed across all regions. Moreover, the losses covered all aspects of the economy, from personal finances to prospects for the economy, including inflation and unemployment. There is little doubt that the pandemic’s resurgence due to the Delta variant has been met with a mixture of reason and emotion. Consumers have correctly reasoned that the economy’s performance will be diminished over the next several months, but the extraordinary surge in negative economic assessments also reflects an emotional response, mainly from dashed hopes that the pandemic would soon end,” Curtin also added in the report.
Looking at the components of the report, the Current Conditions Index dropped to a reading of 77.9, down from July’s level at 84.5. The Expectations Index fell to 65.2, down from the previous reading at 79.
The report also notes that consumers expect inflation to remain at elevated levels. One-year inflation expectations came in at 4.6%, down from July’s reading at 4.7%.